Disney’s Christine McCarthy Emerges As Top CEO Contender To Succeed Bob Iger; CFO Was King Killer Who Took Down Bob Chapek

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With the unexpected return of Bob Iger last month for a new stint as Disney CEO, the entertainment giant’s veteran chief financial officer Christine McCarthy has emerged as a leading contender to take over the top job.

“Christine has always been a force to be reckoned with, but you have to put her on a list of top five possibilities after the last few weeks,” a Disney insider said of the now prominent CFO. If McCarthy was handed the keys to the Magic Kingdom in the next 23 months, the exec would occupy a historic position as the first female CEO in Disney’s soon to be more than 100 year existence.

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CFOs are key managers but more often than not low profile, working behind the scenes, emerging during earnings season and the occasional investor conference. Rarely do they take center stage, especially in the heat of battle leading the troops into a messy ouster of their boss — and rarer still do they become a king killer.

That’s what happened, however, with McCarthy, the longtime Disney treasurer who became CFO in 2015.

A steady hand in the previous Iger regime and when Chapek was in charge, McCarthy was influential in helping to successfully engineer a string of key mergers, and adept at raising and husbanding cash during the depth of Covid.

Yet, on November 20, the CFO became the public face of the Disney coup d’état. Distraught by the company’s dire bottom line and missteps by Chapek over the last 18 months, McCarthy is the executive whose name is now in the history books for going to the board and its chair Susan Arnold to orchestrate a revolt in the executive suite that brought Iger back after less than a year of official retirement.

Going to Arnold in mid-November, McCarthy, one of the highest-ranking women in the entertainment industry, threatened to resign if Chapek was not cut loose immediately.

“In the 35 years I’ve been doing this, I never saw a CFO go around a CEO,” said one longtime Wall Street analyst, with a tinge of amazement in his voice weeks after McCarthy cut the knees out from under Chapek and his reign of error.

Now Iger, who had handpicked Chapek in late 2019 before quickly souring on the former head of parks and resorts, has just under two years to pick and position a viable successor. In that vein, it’s not surprising the CFO’s name appears in the top five list of talked about candidates for the future CEO job. However, with Iger’s successor track record in mind, that list, which some have placed Dana Walden, chair of Disney General Entertainment Content on too, needs to be trimmed down to one name pronto.

Reality is there aren’t a lot of seasoned executives in or out of the Disney pipeline that have the institutional memory, board relationships, and leadership chops to avoid on the job training and a repeat of the Chapek experiment.

Fact is Tom Staggs’ stunning exit in 2016 as chief operating officer, and streaming kingpin Kevin Mayer’s subsequent departure in 2020 thinned out the Disney upper ranks — before Chapek was tipped as CEO by Iger. Even with scant talent and creative credentials, that pruning leaves McCarthy in a strong position, one media banker noted recently. To varying degrees, the anointed Staggs and golden boy Mayer had both been considered successors to Iger and both left after being passed over and iced out. It’s unlikely, however, that either could move back to the company and the top job unless Disney agreed to buy out Candle Media, a lucrative venture the friends and former colleagues launched with backing from Blackstone.

Analysts and fund managers really liked Staggs, who was also the CFO for years, and are fans of the current chief financial officer, calling McCarthy “very honest,” “very capable” and “a straight shooter.”

“She really shined when the pandemic hit. She did exactly what the CFO should do. She lined up enough cash for one to two years of no revenue. She put together a huge bundle of cash at reasonable rates very quickly to protect the company,” said one.

Disney’s last financial results, however, were shocking as the company spent and spent on streaming, with losses in the division ballooning to nearly $1.5 billion for the fiscal fourth quarter ending in September — more than twice the red ink of the year before and much steeper than expected. Disney’s guidance for next year also looked grim. Analysts wish the company had managed expectations better — which might have avoided a rout of Disney stock.

On an earnings call with analysts after the numbers, Chapek let the deft McCarthy do most of the talking. “She handled all those questions,” said one analyst, of the biology major and botanist who worked at banks for two decades before joining Disney in 2000. Insiders describe McCarthy, who lists aviation pioneer Amelia Earhart as her hero, as “the kind of person who really has the best interests of the company at heart,” as well as “incredibly smart” and a great mentor to women at Disney.

Still, with all McCarthy’s strengths and her recent major muscle flex, time may prevent her from being in the final CEO mix, suggests one Wall Streeter. McCarthy is 67-years-old. “Bob Iger was originally supposed to retire about six years ago when he was 65. So I don’t see them hiring someone [that age] to be CEO” for the long term. “They just went through… how many transitions?”

Whatever the final verdict on a new CEO to replace the 71-year-old Iger for the second time, McCarthy appears certain to be a key player at a delicate period for Disney and the broader media landscape. “Investors are waiting for Iger’s direction on DTC investment, how it plans to drive subscribers, but not any price. This is a market right now that is focused on the cost of that growth, hoping Bob [Iger] gets in there and reviews what his plans are and how spending will drive future profitability.”

Iger has already said he will restructure DMED, or Disney Media & Entertainment Distribution, an unpopular division Chapek created that kneecapped creative decision makers at the company. McCarthy, with Walden, Alan Bergman, Jimmy Pitaro will be working to design “a new structure that puts more decision-making back in the hands of our creative teams and rationalizes costs.”

Which means, to quote Iger’s beloved Hamilton, she will be right in the center of the room where it happens, one way or another.

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